Article
Navigating seamless inter-State ITC transfers under GST: Judicial guidance
By Shweta Walecha, Rachit Arora and Hema Modi
The Bombay High Court has taken a significant step in clarifying the transfer of unutilized ITC during business restructuring. This judgment not only clarifies the legal position on inter-State ITC transfer but also addresses the technical and administrative hurdles posed by the GST Network (GSTN) portal. The article in this issue of Indirect Tax Amicus discusses this decision while noting how the Bombay High Court distinguished the earlier ruling of the Madras High Court. Further, discussing the unresolved ambiguity of revenue loss of the transferor state, the authors advise that businesses must adopt a cautious yet proactive approach. According to them, while the relief supports the ease of doing business, the true challenge lies in harmonizing statutory provisions, judicial interpretations, technological capabilities, and revenue considerations.
Goods and Services Tax (GST)
Ratio decidendi
- Telecommunication towers are not immovable property – ITC is not deniable under Section 17(5)(d) – Supreme Court
- Second provisional attachment, after expiry of initial attachment order, is wrong – Supreme Court
- Parallel proceedings by State and Central Authorities when permissible/not permissible – Supreme Court
- Parallel proceedings – Subsequent notices by State authorities, which were closed, are not fatal to proceedings initiated earlier by Central GST authorities – Chhattisgarh High Court
- Purchase and subsequent sale of vouchers at margin is not liable to GST – Karnataka High Court
- Relevant date for refund when tax mistakenly paid as CGST but later also paid correctly as IGST – Patna High Court
- Limitation for issuance of SCN – Expression ‘three months’ in Section 73(2) must be interpreted as three calendar months and not 90 days – Delhi High Court
- No ITC related to supply of Duty Credit Scrips available for period prior to 5 July 2022 – Insertion of Explanation (1)(d) in Rule 43 is not retrospective – Chhattisgarh High Court
- ITC is not available on coal used in generation of electricity consumed in maintenance of township – Chhattisgarh High Court
- No penalty under Section 74 if tax was not paid due to bona fide dispute over interpretation of law, which was litigated up to Supreme Court – Karnataka High Court
- Divergence of demand between pre-notice intimation and the show cause notice is fatal – Calcutta High Court
- Demand – Summaries in DRC-01, DRC-02, and DRC-07 are supplementary and cannot replace the requirement of proper and authenticated primary documents – Gauhati High Court
- Consolidated show cause notice for multiple years is permissible in case of fraudulently availed ITC – Delhi High Court
- Squaring off the amount paid in Electronic Cash Ledger for liability, when returns not filed due to liquidation – Madras High Court
- Refund – Citation of a wrong provision or typographical error in the forms is not fatal – Allahabad High Court
- Service of notice – Mere uploading on portal or sending e-mail is not sufficient when registration already surrendered – Karnataka High Court
- Refund of tax paid in cash when ITC available – Applicability of CBIC Circular No. 26/26/2017-GST – Andhra Pradesh High Court
- ITC available on construction of concrete tower constituting foundation of plant and machinery – Gujarat Appellate AAR
Customs and FTP
Notifications and Circulars
- Cotton, not carded or combed – BCD and AIDC exempted till 31 December 2025
- Jute imports from Bangladesh – Port restrictions imposed
- Diamond Imprest Authorisation – Imports not eligible for exemption from IGST and Compensation Cess
- Chemicals – EO period for imports under Advance Authorisations of products under mandatory QCOs extended
- Virgin Multi-layer Paper Board – Minimum import price imposed till 31 March 2026
- Natural honey – Minimum Export Price lowered
Ratio decidendi
- MEIS – Inadvertent procedural error in shipping bill, which corrected under Customs Section 149, is not fatal – Supreme Court
- Advance Authorisation condition when not violated in case of transfer of duty-free goods to sister concern – Gujarat High Court
- Customs cannot confirm duty demand till EODC issued by DGFT is not cancelled – CESTAT New Delhi
- Status Holder Incentive Scheme – Good having separate and distinct usage in manufacture are capital goods and not parts/spares/components of capital goods – CESTAT Kolkata
- Interactive Flat Panels are classifiable under Customs TI 8471 41 90 and not under TI 8528 59 00 – CESTAT Mumbai
- Appeals before CESTAT by Directors of company – Pre-deposit from company instead of from Directors’ accounts is valid – Delhi High Court
- No penalty under Customs Section 114A in case of classification of goods differently than what believed by Department – Benefit of Section 28(2) available – CESTAT New Delhi
- Delay in obtaining EODC, due to reasons beyond the control of the assessee, is not fatal – CESTAT Chennai
- Exemption to diagnostic kits for detection of HIV – Purposive interpretation of exemption notifications to be applied to allow benefit to technologically advanced kits – CESTAT New Delhi
- Water balloons for use in Holi are classifiable under TI 9505 90 90 and not as toys; Holi is also a festival – CESTAT Chandigarh
Central Excise, Service Tax & VAT
Ratio decidendi
- Export of service when contractual customer is located outside India, but beneficiary is in India – Supreme Court
- Valuation – Transportation/insurance charges when not includible – Supreme Court
- Classification of ‘spice mixes’ – Presence of more than certain quantity of other substances does not necessarily make the product lose its individuality – Supreme Court
- Kerala VAT – Purchasing dealer cannot be denied ITC solely on ground that the selling dealer failed to remit the tax collected – Larger Bench of Kerala High Court
- Demand – Extended period is not invokable merely because Department came to know the facts when audit was conducted – CESTAT New Delhi
- Repairs and maintenance of landscaping of road dividers is covered under exemption for maintenance and repairs of roads – CESTAT Mumbai
- Fish caught from ocean and purchased from fisherman is not agricultural produce – CESTAT Ahmedabad
